SpaceX IPO creates over 4,000 millionaires from welders to contract workers
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With the IPO of SpaceX (formally Space Exploration Technologies Corp; $SPCX) On June 12, there was endless commentary about Elon Musk’s status as the world’s first US dollar billionaire. But in my eyes, his greatest success in creating wealth is not what he has done for his wealth, but what he has done for others.
It has been reported that by going public, SpaceX created a fortune not only for Musk, but for many employees. In fact, it’s estimated that the going public has made millionaires (at least on paper) of more than 4,000 SpaceX employees, including not just top management, but workers in roles ranging from cafeteria workers to contract workers.
Wealth is inextricably tied to the ownership of assets, which are assets that have the potential to appreciate in value. By allowing employees to participate in the ownership of the company they work for, they have an incentive to do their part in making the company successful, knowing that they will receive some of that profit.
Whether that’s organized as equity grants, options and/or stock purchase plans, it’s not just one person who gets rich, it’s a whole group of people.
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Musk says space will soon be the lowest-cost place to power artificial intelligence, citing solar power that’s always in orbit. (Photo by Aubrey Gemignani/NASA via Getty Images)
That’s exactly what SpaceX has done for its team.
At a time when corporations are considered “greedy” by the mainstream media and progressive politicians, when physical ownership is being replaced by subscriptions, and when government deficits and Fed money printing have reduced purchasing power, it is refreshing to see honest, hard-working Americans in all occupations able to participate in creating true wealth for their families.
About ten years ago, Juan Hernandez took a job as a contract welder at a company he didn’t know – SpaceX. He was given a stock grant as part of his SpaceX pay package, and now his earnings are in the seven figures. As if that wasn’t amazing enough, he shared in the interview that this positive experience has led him to teach investing to his three children.
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SpaceX may be the most high-profile company for sharing wealth with its employees, but it’s not the only one.
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Private equity firm KKR, led by partner Pete Stavros, has made it a mission to share wealth creation with the workforce of the companies it invests in. One of the few examples is when KKR sold CHI Overhead Doors to steel manufacturer Nucor Corp. a few years ago. The company’s hourly employees, including factory workers, reportedly earn between $20,000 and $800,000 before taxes, with a total of $360 million going to employees, most of whom are not in the C-suite.
Creating win-win situations is good for everyone involved. Employees help build businesses and are often the best ambassadors. Having “skin in the game” in a low-risk way with equity options or similar structures creates positive results for businesses, their employees and their customers.
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Elon and his team aren’t just building rockets, they’re building fortunes. Other companies should not only learn from SpaceX’s results, but the motivations of the team that helped them get there.
Hopefully, we will see more companies, start-ups, mature companies or those going through a change of ownership, allow their employees to participate in ownership and wealth creation.
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